Share price matters, as do your shareholders. But your share price is, by its nature, an output: a complex, rolled-up reflection of company performance, conjecture, fickle asset-class preferences, risk appetite, ownership mix, supply–demand equilibriums, and fluid expectations held by millions of shareholders who can change their minds in a millisecond. Good luck trying to manage that.
Moreover, your share price is subject to a more fundamental paradox that affects every publicly traded company: the paradox of market equilibrium. The better your operating results, the harder it is to create shareholder value. Not only is it harder to outperform the market, but you run a greater risk of underperforming the market.
To create shareholder value by generating actual stock returns, you must exceed the embedded expectations of your investors. But if your operating performance is good, they already expect you to improve, and it is harder to surprise them. Do even better, and they will expect even more.
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